Macroeconomics & the euro

A dozen years after the Delors Committee produced a plan for Economic and Monetary Union, the euro finally becomes a reality for 300 million Europeans this January.

The Stockholm European Council was supposed to focus on Europe's "new" economy and the goal of creating "the world's most dynamic and competitive knowledge-based economy by 2010".

Even by the standards of the EU's often optimistic policy aspirations, the decade-long economic reform process initiated at the Lisbon summit last March represents an ambitious programme.

The distinctive feature of the Lisbon conclusions is not the pledge of EU leaders to create "the most competitive and dynamic knowledge...

Now that the euro has stabilised, Greece has joined EMU and the EU has committed itself to enlargement, the time is right to consider these critical issues of economic governance.

The claim may seem perverse, when the euro has barely crawled off its record lows, but there is a good case for saying that America rather than Euroland faces a looming currency crisis.

Slowly, and somewhat reluctantly, the EU is beginning to embrace economic reform. For years America's equity-orientated, shareholder-value-driven economic model appeared anathema to much of the continent.

Europe's citizens, generally speaking, do not want their taxes set by Brussels. Taxation and representation still go hand in hand. So it is safe to assume that so long as people continue to look to their national governments to represent their interests (and turn out to vote for their national politicians in greater numbers than for MEPs), they will reject the notion of taxation policies being decided at European Union level.